Firm Created to Invest in Distressed Residential Properties
Two veteran real estate professionals have formed a new investment firm that buys, renovates and sells distressed residential properties.
Bob Pabian and Chief Denney will be the executive managing directors for Compass Real Estate Capital. Combined, the principals have been involved in more than 1,400 real estate projects across the country totaling $240 million.
Over the past two years, the Compass principals have purchased 67 homes, with an annual cash-on-cash return of 50.7%. During that time, the average purchase and sale resulted in a 14.5% profit for every transaction. Properties were bought and sold in an average of 104 days.
“Compass principals have developed a winning formula over the past 30 years, in both up and down markets,” Denney said. “We buy distressed homes at 25% to 40% below comparable properties and make quality renovation to bring those homes in line with prevailing market prices. We then sell the homes within months of purchasing the property. This approach minimizes risk and maximizes the sale proceeds.”
Compass invests primarily in single-family homes priced between $175,000 and $400,000. The San Diego-based firm invests in select markets where there is a large or growing inventory of foreclosed properties and prices are stabilizing or appreciating.
“We like San Diego because prices are stabilizing or appreciating in certain neighborhoods,” Denney said. “Compass has extensive knowledge of the region, and we believe there is a large inventory of affordable properties that can be improved and sold to a large pool of first-time and trade-up buyers.”
The firm also works with local contractors to make interior and exterior improvements to the acquired properties.
Other metropolitan statistical areas that the firm has purchased and sold distressed residential properties include Phoenix, Las Vegas, Memphis and Atlanta. The purchases are made on an all-cash basis so the firm does not incur any debt when buying a property.
“Compass Real Estate Capital was created by real estate professional who have been very successful investing in foreclosed and distressed assets,” Pabian said. “Compass understands how to identify, renovate and quickly sell properties. In the process, we’re helping revitalize communities by injecting new capital and energy into local neighborhoods.”